Court documents blame ex CEO of Merced clinic for its closure. Here's who she blames

The founder and former CEO of a defunct Merced health clinic that served thousands of low-income patients has been accused in court documents as the person responsible for the clinic's deterioration and federal investigations.

She’s speaking out for the first time and says the chief financial officer is the one to blame for its bankruptcy filing in early May and closure in August.

Sandra Haar and the clinic she founded, Horisons Unlimited Health Care, which used to have eight sites in Merced, Madera, Mariposa and Stanislaus counties, have been involved in a string of legal battles since March 2017. Haar, who headed the clinic since its opening in 2004, was sued, fired and accused of misconduct that allegedly allowed her and her family to profit from the clinic.

“Horisons believes that Ms. Haar was responsible for subjecting Horisons to criminal and civil investigations, which have directly jeopardized Horisons’ ability to serve its patients throughout the greater Central Valley area,” plaintiffs said in documents filed on May 30 through the United States Bankruptcy Court in Fresno.

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Haar’s “wrongful acts were done knowingly, intentionally, maliciously, oppressively, fraudulently and with the wrongful and unlawful intent” to benefit herself and family members, documents also said.

Among other allegations, Haar is accused of taking out a nearly $760,000 loan from Horisons to purchase clinic sites that she leased back to herself and employing family members at Horisons even though they had no formal duties, alleged a lawsuit filed on May 3 through the Merced Superior Court.

However, in a phone interview with the Sun-Star, Haar denied any wrongdoing and said she never profited from the clinic while she was CEO. She pinned the clinic’s legal troubles and closure on former CFO Daniel Kazakos, saying the 37-year-old orchestrated the process that led to closures and set her up to take the fall.

But according to court documents filed by Kazakos, he was the one who discovered transactions conducted in secrecy by Haar that were alarming.

In a declaration filed on May 11, Kazakos described transactions and business dealings involving Haar as “concerning and questionable.” Kazakos said he uncovered the questionable transactions after gaining “unrestricted access” to clinic records when Haar went on medical leave in December 2016, according to the documents.

In Kazakos’ declaration, he said Haar authorized, paid and received “excessive personal salary and benefits” without the board’s knowledge, authorized “self-serving lease agreements” between Horisons and properties owned by her and her husband, created “undocumented, self-serving, employee lease arrangements” between the clinic and companies owned by the Haars and “other agents acting in concert” with Haar.

An audit in February 2017 by the U.S. Department of Health and Human Services "identified potential self-dealing transactions involving Ms. Haar and Horisons,” Kazakos said in his declaration, and as a result the clinic’s board decided to suspend Haar without pay.

Haar was fired on Feb. 9, according to documents filed through Merced County Superior Court on March 3.

Haar’s claims that Kazakos is the reason it closed and is under investigation directly contradict court documents in which Kazakos said he discovered Haar’s alleged mismanagement and financial wrongdoing.

Haar insists she did not profit from the clinic. She told the Sun-Star neither she nor her family ever did anything wrong and said the only money she received from the nonprofit was her salary as CEO, around $307,000 a year.

In 2015 Haar is reported to have made $328,154 with $164,492 in reportable compensation from related organizations, according to the most recent Form 990 filing available on GuideStar.org. In 2014, Haar made $316,000 with $158,400 in reportable compensation from related organizations, tax forms say, and in 2013 her salary was $291,692 with $146,215 in reportable compensation from related organizations.

Haar made significantly more money than comparable nonprofit health care CEOs in Merced County. CEO of Livingston Community Health, Leslie McGowan, made $259,689 in 2016, according to the clinic's Form 990 filing, the most recent available at GuideStar. The clinic has six different sites.

CEO of Golden Valley Health Centers, Tony Weber, made $180,916 in 2014, tax forms on GuideStar report. Golden Valley has more than 30 locations across the Central Valley, according to its website.

Haar said she had a stroke on Dec. 21, 2016, and went on medical leave. She said the day she went on leave, Horisons had a savings balance of $6.7 million. Once she left, she claims, Kazakos “started blowing money like crazy,” giving himself and other employees raises. She said Kazakos ran the clinics into the ground in about two months, between late December 2016 and February 2017.

Kazakos was hired at Horisons as CFO in June 2016, the documents say.

A lawsuit filed in Merced County Superior Court by some of the members of the clinic’s governing board allege Kazakos’ yearly salary tripled in less than a year from about $50,000 when he started to about $150,000 and said he received back pay of more than $13,000.

The salary of the interim CEO who was appointed after Haar went on medical leave, Cylia Estrada, was boosted to $200,000, and she was awarded back pay of more than $244,000, the suit alleges. Estrada formerly was employed as a medical assistant at the clinic, earning $25 an hour, it says.

Estrada could not be reached for comment.

“No way did (I do) anything to make more money,” Haar said. “I was very frugal. I kept that company debt-free. Nothing has a mortgage on it. I am the founder; I poured my life into the clinics.”

Kazakos was hired in October 2017 as CFO for another rural health clinic in Lassen County, Northeastern Rural Health Clinics. In 2016, he ran unsuccessfully for Merced City Council as a District 3 candidate. Prior to his position at Horisons, Kazakos was the president of Merced Main Street Associations.

Lease agreements

Haar and her husband, Norman, have been accused of leasing properties they owned to Horisons at higher prices to profit financially since March 2017. One of the allegations is Haar authorized and received a $758,346 loan that was used to “purchase properties that were then to be leased to and occupied by Horisons.”

Haar told the Sun-Star she did take out that loan, but didn’t know she couldn’t do that at the time and has been paying the loan back ever since. She said she did “everything we can do to make it right.”

The balance left over of the loan Haar continues to pay is around $200,000, she said.

However, documents filed in December through the bankruptcy court by court-appointed trustee James E. Salven, say “The Haars also engaged in a scheme whereby they purchased or leased clinic locations, and then leased or subleased the locations to Horisons Unlimited, presumably at a mark-up.”

Norman Haar Rentals, owned by Haar’s husband, collected $1,005,952.78 from the clinic two years before the bankruptcy filing, the documents show.

Haar said she and her husband owned the clinic spaces they leased to Horisons but “never” leased them at higher rates. Horisons wasn’t able to get approved for a loan to buy clinic spaces, she said, so Haar was “forced to buy them personally.”

“They (banks) wouldn’t give loans to an unstable nonprofit,” she continued. “They just wouldn't do it.”

“As things progressed that’s what we kept doing,” Haar said. “We did not lease them for more than what we got, some leased under. That’s not true that we made money off the (clinics).”

If Haar co-signed onto a loan, she said, the clinic would have obtained a loan but she “just decided to own it.” Haar said she continued to buy spaces to lease to the clinic “out of habit” and because it made the process “easier.”

She added: “Why would I want to rent from a stranger when I can rent from myself?”

Millions connected to the Haars

Along with the money connected to Norman Haar Rentals, millions more trace back to Haar and her family, recent court documents filed by Selva on Dec. 6 show, and most of that money was collected within the two years before the clinic went bankrupt.

Haar received “compensation” of $962,044.03 from Horisons in 2016, according to the documents, and her husband also received $40,087.03 from Horisons.

A separate agency Horisons used for its medical billing received $1,870, 855 from the clinic in the 17 months before the bankruptcy filing, according to the documents, and “not surprisingly, that entity, Medical Billing Consultants, was owned by Sandra Haar’s daughter.”

Sara Price, Haar’s daughter, was named “principal” of Medical Billing Consultants, in documents filed on May 11 through the eastern district court by Kazakos.

“There was no profit from that,” Price told the Sun-Star in a phone interview. Price also claims she did not receive any money from Horisons outside of the wages she made, which was $127,877 in 2015 with $11,800 in reportable compensation from related organizations, according to tax reports available on Guide Star.

As director of the clinic, Price earned $48,127 in salary and $312,846 in reportable compensation from related organizations in 2014.

An additional $187,421.60 in transfers was given to employees from Horisons, Medical Billing Consultants and Thomas Dental, documents say.

Medical Billing Consultants received compensation of $1,205,069 in 2015, tax filings report, and in 2014 thier compensation was $808,397.

The transfers were “payments to employees of formerly affiliated entities for wages prior to the transfer to Horisons Unlimited payroll.” Thomas Dental Group also received $241,000 for “undocumented transfer for unknown services,” according to the documents.

Accusations of nepotism

Documents filed by Kazakos also list seven family members that Haar employed at Horisons, including her husband, four daughters, sister, son-in-law and sister-in-law.

The lawsuit also alleged that Haar employed her husband for an annual salary of $65,000 with a $50,000 annual pension “even though he had no formal position or actual operational duties.” Norman Haar earned $60,320 in 2014, according to tax filings available on Guide Star.

Haar said her husband did have a position at Horisons and worked in maintanence and as a book keeper. She also said he did not receive a pension.

"There's nothing wrong with your husband working for you," she added.

Haar said she see's no conflict of interest when it comes to hiring family members and said she gave them no special treatment and "treated them like everyone else."

At least seven different law enforcement agencies are conducting or have conducted investigations into the clinic, including the U.S Department of Justice and the FBI.

On March 14, Horisons received a “civil investigative demand” from The United States Attorney’s Office that said they were investigating allegations that Haar and her husband, Price, Horisons, Medical Billing Consultants, Thomas Dental Group, Haar properties and Thomas Emergent Services submitted false claims that were “excessive, medically unnecessary, and inadequately documented procedures,” documents said.

A “civil investigation” was also being conducted by the U.S. Attorney Office for the Eastern District of California on whether Horisons, Medical Billing Consultants, related agencies and people falsely submitted claims for medical services to Medi-Cal and Medicare.

Haar said she did not submit false documents to Medi-Cal or Medicare and if evidence of fraud is found she “didn’t know” about it.

Price said she has no knowledge of any fraudulent documents or wrongdoing.

“As far as I know they (investigators) are wasting their time,” Price said. “Without existence of Daniel Kazakos in that company it would still be running today. I believe that.”

According to legal documents, 80 percent of patients Horisons served were insured through Medi-Cal and an estimated 46,000 patients were seen at the clinics last year.